Suppose That a Firm Has Only One Variable Input, Labor

question 625

Multiple Choice

Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the marginal cost of production when the firm hires the 7th worker?

• A)$1.50
• B)$2.50
• C)$5
• D)$10

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Definitions:

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